Author

in partnership with

Mauritania

Real Estate

1. Are there restrictions on foreign entities holding interests in land, and if so, how are they expressed?

Law No. 2012-052, dated 31 July 2012, relating to the investment code (the Investment Code) guarantees investors equality before the law, irrespective of nationality or origin. This includes property rights, which are protected under the Mauritanian Civil Code, which is modelled on the French code. Likewise, mortgages exist and are extended by commercial banks.

There is a well-developed property registration system for land and real estate in most areas of the country, but land tenure issues in southern Mauritania, particularly the area along the Senegal River, are the subject of much controversy.

There is nothing in Mauritanian law preventing foreign investors from acquiring real estate property. The State may make concessions for national and foreign investors buying property for professional purposes. Investors must apply to the Ministry of Economy and Finance through the land registry agency (Direction des Domaines). The procedure for purchasing, renting or selling real estate property is the same for everyone.

Investors should be fully aware of the history of the lands that they are purchasing or renting, and should verify that the local partner has the proper authority to sell or rent large tracts of land – particularly in this region – before agreeing to any deals.

In 2015, the Ministry of Economy and Finance established a computerised system to provide more transparent land allocation. All information regarding property titles is available at the Land Registry Agency housed at the Ministry of Housing, including information related to mortgages and other tax-related matters.

The Land Registry Agency performs due diligence prior to making the final title transfer. To register a property, owners only need to have their notarised sale agreement along with the title certificate.

In practice, however, investors should note it can be difficult to gain redress for grievances for property rights through the courts.

Foreign investors undertaking business in Mauritania can benefit from different advantages under the Investment Law (including land acquisition) under the following regime:

Certificate of Investment granted by the Office for Promotion of Private Investment and International Cooperation “the Guichet unique”;

operation under a Free Zone regime;

benefits for medium-sized enterprises (PME); and

there is a special regime for investment outside the capital city of Nouakchott.

Employment

2. Are there any conditions placed on the hiring of a foreign worker (e.g. local minimum quotas which must first be met)?

Local law requires that employers give priority to citizens over foreign workers, unless the skills required for the position cannot be filled from the national labour force, especially in security-related fields. In this case, the employer should create a plan of “Mauritanisation” to transfer skillsets to local workers within a period of two years.

3. What are the restrictions on redundancies and any applicable compensation?

Contracts of employment of unspecified duration may be terminated at any time at the will of either party. Such terminations shall be subject to the condition that prior notice is given by the party taking the initiative of terminating the contract. Notification of termination shall be made in writing to the other party and shall set out the reason for the termination. The duration of the notice period varies depending on the seniority of the employee. In practice, it means that a senior employee is entitled to a long notice period.

The employee will then be entitled to the payment of the following compensation:

outstanding salary;

severance pay;

compensation in lieu of a notice period; and

compensation for untaken leave.

It should be noted that an employee who is dismissed for gross misconduct is not entitled to either notice payment or severance payment.

Fixed-term contracts cannot be terminated prior to their expiry except in the case of gross misconduct, force majeure, or by the written consent of both parties. In case of gross misconduct, a notice period is not required. In case of unfair dismissal, an employee is entitled to receive compensation.

There are no restrictions on employers resorting to reduce their workforce in periods of unfavourable market conditions (i.e. a termination for economic reasons). However, the law requires that compensation is granted to laid-off employees as regards any periods of notice, severance pay and unpaid leave, depending on the length of tenure, in common with other Francophone countries.

Investment and Local Content

4. Are there any general regulations on foreign investment, including any investment requirements for foreign companies to invest in conjunction with local entities or people, and if so, to what effect?

There is no law prohibiting or limiting foreign investment, which can target any sector of the economy. There are no laws or regulations specifically authorising private firms to adopt articles of incorporation or association which limit or prohibit foreign investment, participation, or control. There are no other practices by private firms to restrict foreign investment. Historically, Mauritania has been relatively open to foreign direct investment (FDI), especially in the fishing, mining, and hydrocarbon sectors. The current government, first elected in July 2009 and then re-elected in June 2014, has prioritised recruiting foreign investment in these sectors. It is working closely with the International Monetary Fund (IMF), the World Bank and the international donor community to improve basic infrastructure and to update laws and regulations.

5. Are there any specific legislative requirements, and if so, what are they?

The Investment Code, last updated in June 2012, was designed to encourage direct investment, by enhancing the security of investments and facilitating administrative procedures. The code provides for the free repatriation of foreign capital and wages for foreign employees. The code also created free points of importation and export incentives. Small and medium enterprises (SME), which register through the Office for the Promotion of Private Sector (OPPS), do not pay corporate taxes or customs duties. The Code also created Special Economic Zones to encourage regional development. Separately, the Nouadhibou Free Zone was created with its own regulatory scheme which is more favourable to foreign investment. The country’s Civil and Commercial Codes protect contracts, although court enforcement and dispute settlement can be difficult.

6. Are there any restrictions on the importation of goods or raw materials into the country, including requirements that local produce is utilised rather than products bought outside the country?

Mauritania has no discriminatory policies against foreign investment, imports, or exports. The mining, fishing, agricultural, banking, petroleum, and technology sectors actively seek foreign direct investment. There are no laws or regulations which limit or prohibit foreign investment, participation, or control. There are no other practices by private firms to restrict foreign investment.

Finance

7. Are there any restrictions on the purposes for which money may be lent?

There are no restrictions on the purposes for which money may be lent.

8. How does the law work in relation to security interests in this jurisdiction, and over which classes of assets may security be granted? Does your jurisdiction recognise the concept of a trust and the role of a Security Trustee?

There is no integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents to security interests in movable assets that exist in the economy. Mauritanian law does not allow businesses to grant a non-possessory security right in a single category of movable assets, without requiring a specific description of collateral.

However, Mauritanian law does allow businesses to grant a non-possessory security right in substantially all of its assets, without requiring a specific description of collateral. Secured creditors are not paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure, nor are they paid first (i.e. before tax claims and employee claims) when a business is liquidated.

Finally, the law does not recognise the concept of a Security Trustee, nor does it allow parties to agree on out of court enforcement at the time a security interest is created. The law also does not allow the secured creditor to sell the collateral through public auction and private tender, as well as for the secured creditor to keep the asset in satisfaction of its debt.

Procurement/PPPs

9. What laws, regulations and guidance are in place to manage the procurement and management of infrastructure projects (including PPPs) and is this regime overseen by a special unit, division or department (such as a PPP unit) within government?

The Mauritanian government already uses some types of public-private partnerships (PPP), particularly in the water and electricity sectors. A dedicated and clear legislative and institutional framework has been put in place to allow real development of this type of tool, and thus to benefit from its assets through the investment and expertise of the regional and international private sector.

On 6 February 2017, the government enacted Law No. 2017-006 relating to PPPs, which manages the procurement and management of infrastructure projects (the PPP Law).

The PPP Law sets the scope of the project, the rules applicable to the award of the contract, the procedures for the execution of the contract, and the means for the settlement of any disputes.

In addition, the PPP Law sets up an inter-ministerial committee with the office of the Prime Minister and a technical support committee to the Minister of Economy and Finance, both in charge of the development of PPP. It also provides for the eventual establishment of an operational PPP unit whose assistance and expertise will be useful to the contracting authorities, the operation of which is not yet known.

The PPP unit will serve as a centre of expertise and help projects reach financial close. The unit will also disseminate PPP information and resources, contribute to capacity building and support contractual authorities in managing viable PPP projects included in the pipeline.

Mott MacDonald was appointed by the World Bank Group to provide PPP advice to the government in 2015, with a brief to develop a comprehensive political, legal and institutional framework to conduct successful PPP transactions and attract national and foreign private sector investments.

Mott MacDonald has supported PPP development in Mauritania for the last two years, having conducted training sessions for Mauritanian officials, helped to develop a dedicated PPP website, advised existing departments and supported implementing institutions. Their commission is due to finish at the end of 2017.

Suppliers for large government contracts are selected through a tender process. Invitations for tenders are publicly announced in local newspapers and on government websites. After issuing an invitation for tenders, the Central Market Commission, a Commission created in each Ministry under the 2012 Investment Code, selects the offer that best fulfils government requirements.

If two offers – one from a foreign company and one from a Mauritanian company – are otherwise considered equal, statutes require that the government award the tender to the Mauritanian company.

In practice, this has resulted in tenders being awarded to companies that are felt by some to have strong ties to government officials and tribal leaders, arguably regardless of the merits of an individual offer, although this is disputed. It is believed that preferential treatment remains common in government procurement, despite the government’s recent efforts to promote transparency in the public sector.

Competition

10. Is there a merger control regime? If so, what are the thresholds for notification?

There is no merger control regime in Mauritania.

11. Is there a competition/antitrust law that prohibits matters such as abuse of a dominant position, cartel behaviour and exclusivity arrangements, and if so, how actively is it enforced?

Law No. 2015-032 repealing, amending and supplementing certain provisions of Law No. 2000-05 of 18 January 2000 of the French Commercial Code, as adopted in Mauritania, prohibits the abuse of a dominant position, cartel behaviours and any agreements and concerted practices between competitors that (directly or indirectly) result in price fixing, or limit production and/or distribution of goods and services.

This new code of commerce has addressed various deficiencies, but it is desirable to have a specific competition law, rather than the actual code of commerce, which just has provisions on competition.

Intellectual Property

12. What protections does the local law provide for intellectual property rights?

The legal protection of intellectual property rights (IPR) is still a relatively new concept in Mauritania, and those seeking legal redress for IPR infringements will find very little historical record of cases or legal structures in place to support such claims. Mauritania is a member of the Multilateral Investment Guarantee Agency (MIGA) and the African Organization of Intellectual Property (OAPI).

In joining the latter, member states agree to honour intellectual property rights principles and to establish uniform procedures of implementation for the following international agreements: the Paris Convention for the Protection of Industrial Property; the Berne Convention for the Protection of Literary and Artistic Works; the Hague Convention for the Registration of Designs and Industrial Models; the Lisbon Convention for the Protection and International Registration of Original Trade Names; the World Intellectual Property Organization, the Washington Treaty on Patents; and the Vienna Treaty on the Registration of Trade Names. Though the government is in the process of launching reforms related to property, product certification and accreditation bodies to protect IPR remains fragile.

Tax and Forex

13. What taxes are businesses subject to in this jurisdiction? Please include, for example, corporate tax, VAT, stamp duty, tax on share issues, etc. and the applicable rates. What transfer pricing rules apply, and are any withholding taxes in force in your jurisdiction?

Businesses in Mauritania are either taxed based on an Actual Profit System (APS) or flat rate tax system (FRS). Taxpayers who have a turnover of MRO 30 million or higher are taxed under the APS. This tax rate is 25% of taxable profit. Those who have turnover of less than MRO 30 million are taxed under the FRS. This tax rate is 3% of turnover.

Stamp duty is levied on most legal instruments and levied on all signing parties, lenders, borrowers and ministerial officers who have prepared an unstamped act. Instruments exempted from stamp duty are specifically stated in the act. The rates of stamp duty on paper documents are set according to the size of the paper. Registration fees are either fixed or proportional, depending on the nature of transaction and deeds concerned.

VAT is levied at a rate of 16% on all economic activities which constitute importation, delivery of goods and provision of services carried out in Mauritania.

There are no special transfer pricing rules in Mauritania. However, the tax authority is allowed to levy tax on any enterprise in Mauritania that has carried out artificial transactions or appeared to have transferred profit to a related entity located abroad.

14. Are there any foreign exchange rules that control repatriation of funds out of this jurisdiction?

There are no legal or policy restrictions on converting or transferring funds associated with investments. Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability of such currencies. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries. To transfer funds, investors are required to open a foreign exchange bank account in Mauritania. Transfers from abroad are limited to EUR 100,000 per transaction, but investors may conclude an unlimited number of transfers each day.

There are no legal transaction limits for investors transferring money out of Mauritania, although regulations to undertake such transactions may be complicated. Hard currencies can be found in commercial banks, although there can be issues as to the extent of any reserves. The Central Bank has liberalised the foreign exchange system and now holds regular foreign exchange auctions, allowing market forces to fix the value of the ouguiya.

However, in practice, foreign currency is in high demand and banks may not have sufficient currency, as the transfer of money out of Mauritania is subject to the availability of those currencies. In that case, the commercial bank must obtain it from the Central Bank in order to conduct the transfer. The Central Bank is required to prioritise government transfers. Delays, although relatively uncommon, have been reported from one to three weeks.

Dispute Resolution

15. What is the courts’ approach to enforcement of foreign judgments or arbitral awards?

The enforcement of foreign judgments in Mauritania is subject to an exequatur order issued by a local court.

Mauritania is party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Mauritania ratified the New York Convention in 1997.

As a result, foreign arbitral awards can be enforced in Mauritania but are also subject to the obtainment of an exequatur.

The party that requests such an exequatur shall therefore submit an application to a Mauritanian court.

It should be noted that a Mauritanian court might refuse to issue an exequatur order if the foreign judgment or arbitral award is contrary to Mauritanian public policy or contrary to good morals.

The government accepts international arbitration of investment disputes between foreign investors and government authorities. There are also domestic mechanisms for arbitration, both through traditional religious institutions and through the courts. The revised Investment Code anticipates a local International Chamber of Mediation and Arbitration of Mauritania (ICMAM) to be housed at the Chamber of Commerce, although, as of April 2015, the ICMAM is awaiting approval from the Mauritanian Chamber of Commerce and the Ministry of Justice.

Previously, issues were referred to the International Center for Settlement of Investment Disputes (ICSID), of which Mauritania became a contracting state in 1965. In 1997, Mauritania became a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (the 1958 New York Convention). The enforcement of such disputes can be lengthy and take considerable time.

In practice, we have not seen a case in which local courts have enforced any arbitration awards under the New York Convention.

16. Are the local courts generally supportive of arbitration proceedings (for example, in granting interim relief in support of such arbitrations)?

No. Mauritanian courts will generally uphold jurisdiction to a dispute, either for reasons involving public policy or if the subject matter of the dispute involves property, in which case, dispute settlement resolution in local courts can take years and obtaining interim relief in such cases may be difficult. The duration of investment disputes are subject to numerous appeals before reaching a final verdict. In other cases, especially where such issues are not involved, they may be more supportive.

In practice, we have not seen local courts granting interim relief for arbitration. It shall be noted that Mauritanian judges are not properly trained and assisted to handle cases with an (international) arbitration element.

General

17. In order for a foreign company to sign a document under local law, are there any signing procedures that must be followed?

No. There are no specific requirements for a foreign company to sign a document under local law.

18. Are there any current legislative or policy developments that companies investing in this jurisdiction should be aware of?